A home-based business is a different piece of cake altogether!  Extra income, being your own boss, controlling your own destiny, freedom from corporate politics, working on your own time, and having enough time to spend with your family are part of the inherent perks.  However, all the reasons that prompted you to embark on a home-based business may soon get evaporated.  Within a short time, you realize that you have to work twice as hard and the precious time with family becomes more elusive.  Moreover, the start up cost is of considerable consideration to you and that without discipline the end result will not be favorable. 

Along with this, you realize the importance of accepting credit cards.  This is where you think about opening a merchant account.  But with your initial small client base, how do you establish a merchant account that is crucial to your business' operation but does not pinch your bottomline?  With proper research, you will find that many merchant account providers have special packages for home-based businesses. 

Weighing the pros and cons of these packages can be time consuming but is worthwhile as you will be not only be wiser but also wealthier by the end of the day.  For your benefit, several pros and cons are presented in this article.  However, every business is unique and you know your business the best.  Hence, you may find more pros and cons that adapt to your business in a more suitable way than what is presented here.  The more your find, the better choice you will be able to exercise.

Home-based business owners generally sell products / services that can be purchased online or through mail order.  Most home-based businesses prefer selling online.  Here you have two options for taking credit card payments.  One is via banks and independent sales organizations (ISOs), which offer true merchant accounts.  The other option is to set up an account with third party providers, such as PayPal.

The home-based business owner must be approved to establish a true merchant account with banks or ISOs.  (This could be a problem.)  An underwriting process needs to be performed where the merchant's personal credit score rating is evaluated as well as the nature of the business and any profitable history, if applicable.  Once accepted, the home-based business owner owns the merchant account where funds are directly deposited into his/her account (a big plus) and customer bank statements reflect the name of the business (another important advantage).  As underwriting has been conducted, there is also less of a chance that funds will be held (thumbs up) and a greater chance that chargebacks can be won (very positive aspect) than third party programs offer.

In the vital area of rates, banks and ISOs may charge fees that are initially higher than those assessed by third party providers (disappointing).  (Still, there exist banks and ISOs that charge very low rates, competing with their third pary counterparts.)  But many experts in the merchant account field, assert that as the home-based business owner begins to process more, increasing monthly transaction volume, total merchant account rates are less than those charged by third party providers.  This is because their discount and transaction rates (i.e., fees per transaction) are generally lower than their competitors (sounding better).

With third party providers, you have to use their merchant account (a negative).  This means that the money is deposited in their account, from where you have to withdraw.  With unscrupulous third party providers, it may take a long time to withdraw your money, or you may not receive your money at all as some providers are outright frauds (be alert).  Another disadvantage is that it their name and not yours is reflected on your customer's credit card statement (a minus).  This may lead to confusion as the customer may not relate the payment to the third party provider with the purchase made at your site, resulting in the customer seeking a chargeback.  But if a home-based business owner needs to set up a system to accept payments quickly and easily, and with relative little upfront cost, third party providers may be very suitable (all beneficial components of third party providers).  

Nevertheless, albeit mine is a biased viewpoint, the best bet for a home based business, in the long term, is owning your own merchant account.  The advantages far outweigh the disadvantages, with the prime one that the money is deposited in your own merchant account over which you have full control.  Since the money is deposited directly into your own merchant account, you need not spend sleepless nights over your money being held -- at least on most occasions.  Please note that banks and ISO can hold your money, too, if they need to verify the authenticy of any given transaction.  But generally, reputable banks and ISOs will work with you and try to confirm the validity of transactions in a speedy manner.

True merchant accounts also happily enable you to have your business' name featured on the customer's credit card statement.  Consequently, no confusion is created and chargebacks are dramatically reduced.  Furthermore, true merchant accounts offer the advantageous option to take payments by swiping credit cards (offline) or online.  You can take payments by telephone, issue refunds and you can charge for recurring services like subscriptions with ease.  Associated fees can be very affordable, depending on the merchant account provider selected.

It appears that the home-based business owner must consider the following:

- Is it imperative to have credit card processing capability? (likely answer of yes)

- Which type of merchant account provider should be selected -- banks / ISOs or third party providers?  (The scope of this blog entry.)

- Narrowing down further, which company should be selected to provide credit card processing capability?  (Research, compare and contrast and make an INTELLIgent decision on how to COLLECT funds.)

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To learn more about our merchant account services, please visit us at  http://www.intelli-collect.com.